Global investor Morgan Stanley's attempt to exit from Bengaluru-based privately held property developer Mantri Developers has hit a barrier, with the Foreign Investment Promotion Board rejecting the latter's proposal to buy back the US investor's stake.

Morgan Stanley executives could not be had for comment. A senior executive at Mantri said the company was yet to receive a communication from the government and comment was possible only after that. A government official declined to comment on the rejection.

A source said such rejections mostly happen because of inadequate information and deficient paperwork by the applicant.

"Mantri Developers proposes to undertake a buy-back of its shares, as part of which all the shares of the foreign investor in the company, aggregating 97,70,190 equity shares having a face value of Rs 10 each, will be bought. This will bring the foreign investment in the company down to zero," FIPB stated on Wednesday.

Morgan Stanley has invested about $800 million in Indian real estate since 2006. "Since they (Morgan Stanley) have raised $1 billion under the eighth global fund and are looking to raise a similar amount under that fund, they are looking to invest actively in India next year," said a source in the sector.

It has $33 billion of real estate assets under management globally, of which 28 per cent is invested in Asia, 51 per cent in the Americas and the rest in Europe.

Morgan Stanley is also in talks with its investee companies such as Pune-based Panchshil Realty and the Sushil Mantri group of Bengaluru, where it has entity-level investments, to exit from these. "Since IPO (initial public offering) markets are yet to pick up, they have to find some other options," the person quoted earlier added. Morgan Stanley had sold a 1.8 per cent stake in Mumbai-based listed developer Oberoi Realty, where it earlier held 10 per cent.